1) Carpio Company begins the month of March with $15,000 of work in process costs
from Job 324 . Information from job cost sheets shows the following additional costs
assigned during March, April, and May of 2014:
Manufacturing Costs Assigned
Job No. March April May
324$25,000
32522,000$28,000$15,000
32641,00013,000
32719,00035,000
32826,00050,000
Job 324 was completed in March. Jobs 325 and 327 were completed in May, and Job
326 was completed in April. Jobs are sold during the month after completion. Total
revenue for jobs sold during the 3-month period is $148,000.
Instructions
Calculate the balances of the work in process and finished goods inventory accounts at
the end of May.
2) The financial information below was taken from the annual financial statements of
Alden Company.
2014 2013
Current assets$280,000$170,000
Current liabilities80,00090,000
Total assets550,000450,000
Sales760,000600,000
Cost of goods sold525,000510,000
Inventory100,000110,000
Accounts Receivable (net)100,00060,000
Net income57,00048,000
Common stockholders equity330,000270,000
Total liabilities220,000180,000
Instructions: Calculate the following ratios for Alden Company for 2014 .
1>Return on assets.
2>Average collection period of accounts receivable in days.
3>Current ratio.
4>Debt to total assets ratio.
5>Inventory turnover.
6>Profit margin.
7>Asset turnover.
8>Return on common stockholders equity.
3) A corporation’s own stock that has been reacquired by the corporation but not
canceled is called ___________________ and is deducted from total
_______________________ on the balance sheet.
4) If fully depreciated equipment that cost $10,000 with no salvage value is retired, the
entry to record the retirement requires a debit to the ___________________________
account and a credit to the _____________________ account.
5) Assume the indirect method is used to compute cash flows from operations. For each
item listed below, indicate the effect on net income in arriving at cash flows from
operations by choosing one of the following code letters.
Code
Cash Flows From Operating Activities
Add to Net IncomeA
Deduct from Net IncomeD
1>Increase in accounts receivable
2>Increase in inventory
3>Decrease in prepaid expenses
4>Decrease in accounts payable
5>Increase in accrued liabilities
6>Increase in income taxes payable
7>Depreciation expense
8>Loss on sale of investment
9>Gain on disposal of equipment
10>Amortization expense
6) A _________________ cost remains constant per unit at every level of activity.
7) Phaedra Hise had earned (accumulated) salary of $103,000 through November 30 .
Her December salary amounted to $9,500. Richard Tangard began employment on
December 1 and will be paid his first month’s salary of $7,000 on December 31 .
Income tax withholding for December for each employee is as follows:
Phaedra HiseRichard Tangard
Federal Income Tax$2,180$1,390
State Income Tax390250
The following payroll tax rates are applicable:
FICA tax on first $110,1007.65% (1.45% over 110,100)
FUTA tax on first $7,0006.2%*
SUTA tax on first $7,0005.4%
*Less a credit equal to the state unemployment contribution
Instructions
Record the payroll for the two employees at December 31 and record the employer’s
share of payroll tax expense for the December 31 payroll.
8) C & H leases a building for 20 years. The lease requires 20 annual payments of
$10,000 each, with the first payment due immediately. The interest rate in the lease is
10%. What is the present value of the cost of leasing the building?
9) Zimmer Company sold the following two machines in 2014:
Machine A Machine B
Cost$76,000$80,000
Purchase date7/1/101/1/11
Useful life8 years5 years
Salvage value$4,000$4,000
Depreciation methodStraight-lineDouble-declining-balance
Date sold7/1/148/1/14
Sales price$35,000$16,000
Instructions
Journalize all entries required to update depreciation and record the sales of the two
assets in 2014 . The company has recorded depreciation on the machines through
December 31, 2013 .
10) Ellen Corhy and Bryn Davis, two salespersons in adjoining territories, regularly
compete for bonuses. During the last month, their dollar volume of sales, on which the
bonuses are based, was nearly equal. On the last day of the month, both made a large
sale. Both orders were shipped on the last day of the month and both were received by
the customer on the fifth of the following month. Ellen’s sale was FOB shipping point,
and Bryn’s was FOB destination. The company “counts” sales for purposes of
calculating bonuses on the date that ownership passes to the purchaser. Ellens sale was
therefore counted in her monthly total of sales, Bryns was not. Jill is quite upset. She
has asked you to just include it, or to take Ellen’s off as well. She also has told you that
you are being unethical for allowing Ellen to get a bonus just for choosing a particular
shipping method.
Write a memo to Bryn. Explain your position.